>Commodity prices and global activity (NATIXIS)

Commodity prices have fluctuated considerably since 2007, with a very rapid rise since the second quarter of 2009. In order to forecast future trends in these prices, it is important to understand whether these fluctuations are linked in a normal manner to those in global activity (output), or whether they are amplified by speculative positions, and to what extent.

To try to answer this question, we use an econometric approach, linking commodity prices to global output. It leads to the conclusion that there is currently a very significant speculative component in commodity prices.

1. Very drastic fluctuations in commodity prices
Since 2006-2007, there have been very drastic fluctuations in commodity prices a surge in the second half of 2007 and early 2008, collapse in the second half of 2008, sharp rise since the second quarter of 2009. The rise in commodity prices in 2009 concerned all commodities with the exception of cereals, and coal to a lesser degree.

2. What prospects?
It is important to ascertain whether these sharp fluctuations in commodity prices are linked in a normal manner to those in global output (total, of industrial products) or are amplified by speculative positions.

3. Commodity prices and economic cycle
We will first study in report the links between commodity prices (oil, non-precious metals, precious metals, food) and the global economic cycle, represented either by global manufacturing output (Chart 3A), or by the global PMI (Chart 3B).

To read the full report: COMMODITY PRICES